The “chained CPI” proposal would change the yearly cost-of-living adjustment (COLA) for Social Security, reducing benefits by $127 billion over ten years and costing Wisconsin seniors nearly $2.3 billion.
Women would be hit especially hard by “the chained CPI” because they typically live longer, rely more on income from Social Security, and are more likely to be poor than men. And it would get worse as they get older, because the cuts would start now and get bigger every year.
Washington should focus on finding responsible ways to address our nation’s budget challenges, not proposals that will hurt retired women and generations to come.
Top 5 reasons why the chained CPI would hurt women
1. Women can least afford a cut in benefits. Women earn less on average than men, are more likely to work part-time, and are more likely to have gaps in their employment. All these factors result in lower average annual benefits for women (about $13,000) then men (about $17,000).
2. Women will face deeper cuts. The chained CPI would cut benefits more with every passing year, and women will see a greater share of these cuts since they tend to live longer and make up a larger share of the population as it ages. More than two out of three (68 percent) Social Security beneficiaries age 85+ are women.
3. Women rely more on Social Security for nearly all of their income. Women are less likely to have other sources of retirement income, such as pensions and savings, and rely more on Social Security for nearly all of their income. In 2010, 38 percent of older women age 80+ that lived in a family receiving Social Security relied on it for 90 percent or more of their income, compared to 28 percent of older men age 80+.
4. Social Security keeps women out of poverty. In 2011, Social Security kept roughly 38 percent of older women out of poverty, compare to 32 percent of older men.
5. It’s less accurate. The chained CPI assumes that when the cost of something you normally buy goes up, you will substitute a lower-cost item. This theory falls short since many seniors spend much of their money on basic goods like heath care – items that rise faster than inflation and don’t have lower-cost substitutes. The burden of health care spending is even greater for women (18.7 percent of income compared with 14.2 percent for men) because their benefits are lower and health care spending is higher.
Call 1-800-323-2230 and tell Washington to reject any budget proposal that cuts hard-earned Social Security benefits.